Filing for bankruptcy can be a stressful time in one's life, but just getting started can be one of the hardest things of all. Not knowing whether you should file for chapter 20, chapter 13, chapter 11, or chapter 7 bankruptcy, which will let you keep certain assets and which will forfeit them, or even how to find a good lawyer, can make an already stressful time all the more unbearable.
This article focuses on the fact that, for many, chapter 13 bankruptcy represents the most appropriate and beneficial form of bankruptcy. Following is a brief description of some of the eligibility requirements of a chapter 13 filing, as well as some specifics concerning asset forfeiture and retention.
The first step towards filing for chapter 13 bankruptcy is determining whether or not your debt level falls within the bounds of eligibility. Regarding your overall debt, you must owe no more than $1.15 million in secured debt, and not have more than $383,175 in unsecured debt.
In order to qualify for a chapter 13 you must also be current on your state and federal income tax filings. If, during one of the preceding four years, you failed to file your income tax returns, you will be automatically in eligible for a chapter 13 filing.
You must also meet certain income requirements for a chapter 13 filing. Specifically, you must be able to demonstrate that, less certain debts which bankruptcy will discharge, your income will be sufficient to fulfill the repayment plan laid out by the courts. Whether it is your own income or that of your spouse, the courts simply need to see proof that you will be able to make good on your debts.
Other acceptable forms of income include social security and pension plan benefits, and even child support and alimony. Additionally, you or your partner may file for bankruptcy individually and use the other income as a source to make good on the repayment plan.
The rule of thumb regarding property and debt repayment in chapter 13 bankruptcies is that you are required to repay unsecured creditors an amount equal to the value of your nonexempt property. Examples of nonexempt property include anything of value that is not specifically used as a means of earning income, such as musical instruments, collectible stamps, coins, or related items, investments in stocks, bonds, or other commodities, and second homes or vehicles.
And don't forget that most repayment plans must be completed within three to five years (see Length of Payment Plan). If the value of your nonexempt assets is fairly high, you may be forced into a monthly payment plan that you simply cannot afford. For most, however, a chapter 13 filing is the most viable way to resolve debt issues.
Overall, chapter 13 bankruptcy hinges on a number of factors, including tax status, debts levels, and your current income, and an experienced attorney like Kreisler Law PC Chicago can help determine whether or not you qualify.